Canada is once again in the news these days, as President Donald Trump and Prime Minister Mark Carney escalate a trade war between the two countries. Trump announced Monday he will impose 50% tariffs on all Canadian vehicles, auto parts and steel beginning Jan. 1, 2027, as widely reported by EFE and other wire services.
For Puerto Rico’s business community, the more useful detail is what the escalating conflict leaves untouched: services, professional expertise and tourism, three categories where tariffs simply do not apply, and where a Canadian economy actively looking to reduce its dependence on U.S. suppliers may be more receptive to an island exporter than it has been in decades.
The opening is real but narrow, and it comes with a hard date. Canadian Prime Minister Mark Carney has pledged to match Washington’s tariffs “dollar for dollar” starting Sept. 8, and Puerto Rico, as U.S. customs territory, sits on the wrong side of that line for anything that ships in a container.
With talks collapsed, 50% tariffs on roughly $20 billion in Canadian products took effect at midnight Saturday. Carney has promised his country will match the new tariffs dollar for dollar beginning Sept. 8.
The opportunity: get in now before the coming growth
The fight is landing on an economy that has had a rough stretch. Canada grew just 1.7% in 2025, its weakest full-year performance since the pandemic-shortened 2020, and tipped into a technical recession in early 2026 after back-to-back quarterly contractions, the only Group of Seven economy to shrink in the fourth quarter of last year.
U.S. tariffs were a direct contributor: business capital investment fell for a fifth consecutive quarter as companies held off spending amid the uncertainty, and the country shed 112,000 jobs in the first quarter, its worst quarterly loss since the pandemic began.
Ottawa’s forward-looking numbers are more encouraging. Both the International Monetary Fund and the OECD project Canada will post the second-fastest growth in the G7 in 2026 and 2027, trailing only the United States, with the OECD forecasting 1.2% growth this year accelerating to 1.7% in 2027 as the trade shock fades and energy exports benefit from higher oil prices. Canadian officials, including Finance Minister François-Philippe Champagne, have repeated that “second-fastest in the G7” framing widely and often.
The framing has its critics. Canada’s Fraser Institute and other economists note the comparison is flattered by population growth. Adjusted for the rapid population gains driven mainly by immigration, Canada’s per-person GDP actually fell 2% between 2020 and 2024, the worst five-year decline since the Great Depression, leaving the country with the second-lowest per-capita GDP in the G7, ahead of only Japan.
Whichever framing is used, the direction matters more than the label for a Puerto Rico exporter or visitor-economy company. A Canadian government pursuing diversification, both domestically through Carney’s One Canadian Economy Act and internationally through new trade relationships, is doing so both from a position of economic pressure as well as motivated by purely local opportunities, which is arguably more reason, not less, for Ottawa to keep courting alternatives to U.S. suppliers.
Why services and tourism are the open lanes
Tariffs are taxes on physical goods crossing a border. They do not apply to services, a point Canada’s own Trade Commissioner Service states plainly in its guidance to exporters: software subscriptions, consulting, architecture, education and engineering, all fields where Puerto Rico shines, are not subject to tariffs. Neither are design, marketing, customer support, financial services or IT work delivered remotely.
That distinction matters more for the island than it might for a mainland state. The island’s largest export by far is pharmaceuticals, $42.3 billion in 2025, or 66.6% of the $62.4 billion Puerto Rico exported that year, according to the Department of Economic Development and Commerce. But those decisions are made by corporate headquarters in the U.S. and elsewhere, not by plant managers in Barceloneta or Juncos.
Puerto Rico-owned companies that want to sell into Canada, by contrast, are far more likely to be selling expertise than cargo. Caribbean Business research found that services also happen to be where Canada has opened the most new ground.
Carney’s One Canadian Economy Act, passed in July 2025, eliminated all 53 remaining federal exceptions to the Canadian Free Trade Agreement. Most of those exceptions involved procurement, and the categories removed include financial entities, commercial land development, transportation services and space projects.
The agency Statistics Canada had estimated that interprovincial barriers were raising Canadian consumer costs between 7.8% and 14.5%; Carney put the total drag on the economy at roughly $200 billion a year.
Do you need a Canadian presence?
Establishing a physical presence in Canada helps, particularly for a Puerto Rican company that sells services and procurement.
Many service sectors carry local-presence requirements, professional licensing rules and residency conditions that function as barriers even when no tariff exists. Government procurement, including the categories Carney just opened, typically requires a qualifying local entity to bid. And services delivered through a foreign affiliate rather than shipped across a border are, worldwide, the dominant channel for services trade.
For a Puerto Rico engineering firm, IT consultancy, architecture practice or financial services provider, incorporating in Canada is less a tariff maneuver than a market-access one. It is also the difference between watching Canadian procurement open up and being eligible to bid on it.
Tourism is also outside the fight
Attracting Canadian tourists is another service export where Puerto Rico can compete. Nothing in the current tariff exchange touches tourism in either direction.
That matters because Canada is one of the few significant outbound travel markets where Puerto Rico has a limited position. Canadian arrivals have historically numbered in the low tens of thousands.
The structural advantages are already in place. Air Transat and Air Canada serve San Juan, Montreal to San Juan is the most-trafficked route, Canadians can book flights and hotels in Canadian dollars, and Discover Puerto Rico maintains a Canada-specific travel guide.
What has been missing is sustained promotion. With Canadian consumers being urged to reconsider U.S. mainland travel amid the political friction, a Caribbean destination that requires no passport-related complications for a Canadian traveler and offers U.S.-standard infrastructure occupies an unusual position. That is, American enough to be easy, distinct enough to feel like an exotic trip to a Latin America.
Canada is actively seeking alternatives to U.S. suppliers, and it will keep doing so as long as the conflict continues. Pharmaceuticals, Puerto Rico’s dominant export, do not appear on the current tariff lists, and the sectors Trump named Monday, autos, auto parts and steel, are not sectors in which Puerto Rico competes. The island’s exposure is limited. Its potential opening, particularly for service and tourism firms, is not.
